With 80% of all Internet Exchanges (IXs) in the area being data center and carrier neutral, the US is gradually moving toward a data center and carrier neutral architecture to accommodate future AI and cloud-based applications. This is supported by a recent independent analysis that Dstream Group carried out on behalf of the international Internet exchange operator, DE-CIX.
According to the report, the U.S. has seen record-high net absorption of data center capacity, a clear indicator that the surge in generative AI is having a broad impact. The findings provide detailed forecasts for the future of the U.S. interconnection landscape while shedding light on the recent changes that have emerged to meet the increasing demand for robust connectivity.
Over the past decade, the deployment of IXs in the U.S. has grown by 600%, primarily in response to the needs of high-performance interconnection driven by advancements in cloud computing, AI, and other digital technologies. The trend towards neutrality in these IXs is also pronounced, as neutral platforms would now offer organizations and network operators an average of four times more connected data centers from different operators compared to previous models controlled by data centers or carriers.
Neutral IXs, which are operated independently and spread across data centers run by multiple operators in a city or region, would provide greater access and more connection points than traditional IX models, according to the report. This distributed approach would create a denser network environment, granting operators and businesses improved options for resilient, low-latency, edge-based connectivity. The report highlights that 35 out of the top 50 largest IXs in the U.S. are neutral, reflecting a strong preference among network operators for this model.
Ivo Ivanov, CEO of DE-CIX, notes that the past decade has demonstrated the value of the neutral and distributed IX model for driving digital growth in the U.S. market. He points out that these IXs, which follow the European neutrality paradigm, are essential for meeting the growing demands of AI, cloud computing, and the Internet of Things (IoT), as they enable very low latency connections that are crucial for both current and future use cases.
U.S. Colocation – Interconnection Ecosystem
The analysis further reveals that the top neutral IXs in the U.S. connect an average of 11 data centers operated by at least two different providers within a metro area. In contrast, data center or carrier-operated IXs typically connect an average of just three facilities, all run by a single operator. The increased variety of operators and geographic spread within metro areas provides businesses with more choices for data center services while also bringing interconnection closer to end users. This proximity would reduce latency and enhance connectivity performance, a critical factor for latency-sensitive applications such as real-time analytics and IoT.
The adoption of a neutral and distributed IX model would bring several benefits for building digital ecosystems, according to Serge Radovcic of Dstream Group, who co-authored the report. He explains that this model allows colocation data centers throughout a metro area, as well as those located beyond the city limits, to participate in the interconnection ecosystem. Such access can reduce the risk of vendor lock-in and enable the establishment of redundant connections, thereby improving the resilience of connectivity for critical applications.
The report uses New York as a case study, illustrating how neutral IXs foster ecosystem growth by providing a high level of interconnectivity. The city is a standout in the U.S. interconnection landscape, boasting two large-scale neutral IXs and two major data center or carrier-operated IXs. New York’s interconnection density is nearly twice the national average, with approximately 134 networks per IX compared to the U.S. city average of 70. The demand for colocation space in the city is high, but the neutral IX model offers a solution to space constraints by incorporating data centers located outside the city’s core into the wider interconnection ecosystem.
The U.S. data center industry in general is also expanding rapidly, driven by the increasing demand for connectivity and the advantages of neutral IXs. The analysis shows that the country currently has an installed data center capacity of 11,200 megawatts (MW), with an additional 5,500 MW under development and 12,600 MW planned. This represents an anticipated capacity increase of over 160% in the near term. The regions leading this growth include Dallas/Fort Worth and Northern Virginia, which are set to play key roles in the future of data center infrastructure.
Phoenix, Dallas/Fort Worth, Las Vegas, Reno, Columbus
The report commissioned by DE-CIX identifies several emerging trends in the data center and interconnection sectors, including edge computing, disaggregated computing, and AI, all of which are expected to increase the demand for the flexibility and resilience provided by neutral IXs. As these technologies continue to evolve, the need for low-latency connectivity solutions will only intensify. Neutral IXs, with their ability to support fast data processing near end users, are well-positioned to meet this demand, especially for applications such as IoT, AI, and real-time analytics that depend on rapid data transmission.
Resilience and redundancy are increasingly critical in today’s digital landscape. The report emphasizes that geographic diversity is essential for business operations, allowing companies to connect to an IX from multiple data centers across a metro area or region. This redundancy would ensure higher resilience and lower latency, which are vital for modern digital services.
As traditional data center hubs like New York, Los Angeles, and Northern Virginia face challenges such as space and power limitations, new growth is emerging in secondary and tertiary markets. Cities like Phoenix, Dallas/Fort Worth, Las Vegas, Reno, and Columbus are experiencing significant expansion, supported by tax incentives, competitive pricing, and strong connectivity. These markets are expected to see robust growth, especially when they have access to high-performance, distributed, and neutral IXs.
Neutral IXs not only promote competition but also encourage collaboration across ecosystems by connecting different data centers and aggregating networks. This approach would foster cooperation, expand market choice, and accelerate growth for all stakeholders in the digital ecosystem. The entry of new neutral IXs would often stimulate the expansion of existing IXs rather than leading to market fragmentation, highlighting the model’s capacity to enhance the interconnection landscape.
In summary, the move towards data center and carrier-neutral IXs is reshaping the U.S. interconnection environment, setting the stage for future technological advancements and enabling more resilient, low-latency connectivity across the country.